During Tuesday’s Asian trading session, the WTI crude oil prices failed to maintain the minor early-day gains, drawing offers under the mid-$ 39.00 level. Let me remind you that the WTI crude oil prices dropped by more than 4%, to $ 38.87 overnight, as trading markets turned risk-off amid the resurgence of the coronavirus. Besides this, the possibilities of Libya resuming oil exports added further bearish pressure to the crude oil prices. At the moment, the crude oil prices remain under pressure, as investors prefer to sell oil and other risk assets, in the wake of new coronavirus restrictions, which could cause bigger economic damage than in the second quarter of this year.

The losses in the crude oil prices were further bolstered after the former US Food and Drug Administration Commissioner, Scott Gottlieb, said that the country is expected to experience “at least one more cycle” of the virus during the fall and winter. The intensified tussle between the US and China, over the South China Sea issue, also exerted downside pressure on the oil prices. Meanwhile, the fresh strength of the broad-based US dollar, backed by the risk-off market mood, also played a role in undermining the oil prices. On the flip side, the latest tropical storm in the Gulf of Mexico has weakened, helping to limit deeper losses in the crude oil prices. At the moment, crude oil is trading at $ 39.42 and consolidating in the range between 39.36 and 40.00.

Due to the rising number of coronavirus cases, worries about global economic recovery are still hovering all over the market, causing US stocks to drop sharply, with the S&P 500 hitting the lowest level since July, as per the latest report. The concerns of rising numbers of COVID-19 cases in the UK, Spain, and some notable European nations, like France, urged authorities to announce restrictions on certain activities. This was evident after the German Health Minister, Jens Spahn, shared a worrying view of the rise in the COVID-19 cases in France, Austria and the Netherlands. Apart from this, former US Food and Drug Administration Commissioner, Scott Gottlieb, also warned that most countries are expected to face “at least one more cycle” of the virus in the fall and winter.

Elsewhere, the risk-off market sentiment was further bolstered by the long-lasting disappointment over the lack of progress regarding the much-awaited fiscal package. The ongoing tussle between the United States and China soured further after US Secretary of State Mike Pompeo accepted help from France, Germany and the UK, in rejecting China’s claims to the South China Sea, at the United Nations (UN). This eventually exerted downside pressure on the market trading sentiment, underpinning the safe-haven assets.

As a result, the broad-based US dollar succeeded in stopping its early-day losses, taking safe-haven bids on the day, amid a risk-off market sentiment. However, the gains in the US dollar could be short-lived or temporary, due to the worries that the economic recovery in the US could grind to a halt, because of the resurgence of coronavirus cases. However, the gains in the US dollar kept the oil prices under pressure, as the price of gold is inversely related to the price of the US dollar. Meanwhile, by 9:48 PM ET (1:48 AM GMT), the US Dollar Index, which tracks the greenback against a basket of other currencies, had edged 0.04% higher, to 93.602.

Across the pond, the reason for the losses in crude oil could also be associated with Libya’s plan to reopen its oil industry. The Analysts from the investment bank, Goldman Sachs, believe that Libya can resume its oil exports quickly, thanks to their large inventories at ports. The bank expects the nation’s oil output to rise to 550,000 barrels per day by the end of December.

On the contrary, the losses in the oil prices were capped by reports suggesting that the Tropical Storm Beta, in the Gulf of Mexico, has weakened. As per the latest report, the strength of the Storm has subsided, allaying concerns of an extended shutdown, which began with Hurricane Sally last week.

Looking forward, traders will keep their eyes on the ongoing drama surrounding the US-China relations, and updates on the US stimulus package. Given the holiday in Japan, in celebration of the Autumnal Equinox Day, coupled with the absence of any significant data/events, the movement of the USD and coronavirus headlines will be key to watch. Good luck!